SkyBridge Earning 38 Percent On Mortgage Bets
The New York-based firm's main fund returned 12.2 percent last year, according to a person familiar with the results.
Returns of 20 percent or more in securitized debt are unlikely after the rallies, said Clayton DeGiacinto, chief investment officer of Axonic, a $2 billion structured-credit asset manager based in New York. Hedge funds can still make above-average returns by investing in and trading the securities partly because of new rules that are restraining banks' activity, he said.
"We're never going to go back to the way the market was in 2006," said DeGiacinto, a former Goldman Sachs Group Inc. trader. "Those days are long gone." His main fund returned more than 12 percent in 2013, a person familiar with the results said. With banks pulling back, it's become easier for "holders like us, who've built up an expertise in this asset class."
SkyBridge's annual SkyBridge Alternatives Conference is the largest annual U.S. symposium for hedge funds. Scaramucci's ability to network and draw big names to the annual event has earned him the nickname "the Mooch" in the hedge-fund industry.
SkyBridge is often asked why it doesn't devote more attention to managers looking to invest in areas such as distressed European assets, according to Gayeski. Mortgage managers are a big reason why.
"The answer is the remaining opportunity in mortgage- backed securities," he said. Those "we believe offer equally compelling returns, with more liquidity and less dependence on an economic rebound."